Chrysler Efficiency Catches Toyota: Now Change Perceptions
CNBC Auto and Airline Industry Reporter
They finally did it! After years of trailing the Asian automakers when it comes to assembly plant efficiency, one of the Big 3 has finally caught Toyota.
It's a major achievement Chrysler should rightfully be proud of. But it also highlights the next challenge for them, as well as GM and Ford: closing the "perception gap."
First, here's the good news for the Big 3 on assembly plant efficiency.
The Harbour Report, long considered the bible for automakers cutting costs and making vehicles more efficiently, shows Chrysler and Toyota both take 30.37 hours to build a vehicle in the U.S. That's the shortest time in the industry. GM (32.29 hours) and Ford (33.88) also improved. This number is important because the fewer hours to build a vehicle, the lower the costs.
Credit the execs in Detroit and the UAW for making these improvements. After years of reports about the union workers being the problem with the decline of the Big 3, those workers deserve credit for working to make their company's more efficient.
While the Harbour Report shows improvement for Detroit, it also highlights how far the Big 3 need to go to improve profitability. Nissan and Honda make $1,641 per vehicle. Toyota takes in $922. But Chrysler (-$412), GM (-$729) and Ford (-$1,467) all lose money per model. That speaks to Detroit's inability to improve pricing on cars and trucks and ultimately that highlights the Big 3's next challenge of closing the perception gap.
This has been and will continue to be a tough issue to resolve. While Detroit's building better designed and quality cars and trucks, the public is slow to change it's attitude about a Chevy, Ford or Chrysler. Too often, people still view domestic models as being cheap and poorly built even though many models are every bit as good, if not better, than the competition. Take the Chevy Malibu or Ford Edge. Both models show Detroit can build winners people want to drive.
This is how the perception gap will be narrowed. Doing it one model at a time. If the U.S. automakers can follow up with more well designed and well made models they will catch their Asian rivals in the mind of the buyer, just as Chrysler has now done in assembly plant efficiency.
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